Abstract

We devise and execute three experiments to test key features of models of household
decision-making. Using established couples (married and unmarried) we test income pooling,
unanimity and Pareto efficiency. Subjects make choices individually and jointly and are asked to
make predictions about their partner’s choices. Unanimity is rejected. Income pooling is not
rejected in joint choice but has less explanatory power in individual choice. In direct tests both
sexes do not pool income completely, but in econometric tests across all tasks, women place an
equal weight on payoffs but men discount their partner’s payoffs by between 15 and 20%. We
find that transparency has little impact on deviations from income pooling or indeed on behaviour
generally. Many joint choices deviate from the Pareto principle in a systematic manner suggesting
that choices made as a couple are more risk averse than individual decisions.

Item Type:

MPRA Paper

Original Title:

The family under the microscope: an experiment testing economic models of household choice.